If GPS maker Garmin Ltd. wants to get consumers away from Google's free mapping services, it will have to make more deals like the one it did on Monday with 3D mapper Intermap Technologies.
Now, by 3D we don't mean Avatar 3D. Think Toy Story 3D.
Terms of the deal were not disclosed, but analyst Jeff Rath with Canaccord Adams said it is considered a win for Denver-based Intermap.
"Garmin is the largest [original equipment manufacturer] of these products in the world," he said.
Investors liked the move enough to drive shares in the company up as much as 18% to $1.90 in morning trading on the TSX, although the stock had returned to the $1.75 level by Monday afternoon.
Shares in Garmin were initially up slightly but the stock had declined 1.17% to US$35.49 on the NASDAQ by mid-afternoon as well.
Mr. Rath does not consider the move a gamechanger for Garmin. Rather, it's another step in its continuing battle with Google and other free mapping services available online.
"Google's free offerings put pressure on Garmin to differentiate," he said. "Garmin needs to continue investing in the best databases and products."
Intermap has been developing 3D bird's eye view maps of the United States and Western Europe through its NEXTMap database. These 3D maps will start popping up in Garmin products in Europe within the next 60 days, Brian Bullock, chief executive with Intermap, said in an interview.
"It was the European activity we had that opened the door for us," he said. "They said, you have data for Europe, and we want Europe."
Mr. Bullock said Garmin will not need to modify its existing products, which allows for the quick move to market. He expects Intermap mapping to expand to Garmin's North American lines in 2011.
Mr. Rath has a Hold rating and $39 target for Garmin. As for Intermap, with which Canaccord has an investment banking relationship, Mr. Rath has a Speculative Buy rating and $5 target on the company.
This is image of Morrison, CO, just west of Denver, seen using
orthorectified radar, digital surface and terrain imaging. According to
the company, if you squint really hard you can see dinosaur tracks.
(Image: Intermap Technologies)